In response to the COVID-19 pandemic, the IRS is allowing employers to switch from the vehicle lease valuation method to the cents-per-mile method (57.5 cents for 2020, 56 cents for 2021) for determining the value of an employee’s personal use of a vehicle during the pandemic.
Because many businesses have either closed or switched to telecommuting, employers noticed that using the Regs. Sec. 1.61-21(d) automobile lease valuation rule led to an increase in the lease value required in an employee’s income for personal use of a vehicle in 2020. In contrast, the cents-per-mile method produces a more accurate income inclusion.
The IRS will permit employers to use the cents-per-mile method beginning March 13 and continuing through 2020. Learn more.